Online Retail Market — the Revolution Was Already Made

In 2018, we are so used to shopping online that we are starting to forget how things were before the online retail sector got big. A lot of things that we, consumers and retailers, took for granted were impossible in the not so distant past.

Let’s take a closer look at the online retail market — a rare sector of the economy where words like “revolution” and “disruptive innovations” can actually be used for real.

How has online revolutionized the retail?

First off, ordering items online has optimized logistics — store owners no longer need to store all their goods on the shelves. It enabled them to operate from smaller shops with cheaper rent or even move their operations to online completely.

This brings two benefits:

• Retailers now can lower the prices drastically since their operational costs decreased.
• The long tail concept became a reality.

The long tail concept distributes goods according to their popularity: the most popular goods enjoy huge demand while the demand for niche products is significantly lower.

When retail existed only in the offline world, store owners usually stocked their shelves predominantly with the most popular items — it was irrational to use limited and expensive place on the shelves for items that are hard to sell. Due to this fact, niche products were usually only available in specialized stores.

With the online retail system, store owners no longer need to put everything out on the shelves — products can be shipped to the customer’s door right from the warehouse where storage space is much cheaper. This made niche products more available — for customers — and more profitable for the sellers.

Long tale explanation.

image: courtesy of Quora.com

Shopping online provides consumers with a lot more opportunities to make a smarter choice — it’s easier to compare various similar products while browsing Amazon website from your computer at home rather than in a physical store.

This ultimately leads to the increase of the quality of the products since it has become more difficult to make a wrong choice.

It’s also much easier to create a store now — you don’t need to purchase/rent a space, hire staff, etc. It’s not even necessary to rent a space in a warehouse — small retailers can operate even from home. Entry barriers that low lead to the increase in the market size.

Let’s take a look at some recent stats regarding the online retail segment:

Sales are huge and they are growing steadily: for the year 2017, the total amount of global sales in e-commerce is expected to hit the $2 trillion mark (the exact number hasn’t been calculated yet). If that does not sound impressive enough for you, get this: the number is expected to grow as high as $4.4 trillion in 2021.

Retail e-commerce sales worldwide from 2014 to 2021 in billion U.S. dollars (graph by statista)

E-commerce sector accounted for approximately 10.1% of the whole retail industry in 2017. Its share is expected to grow to 15.5% in 2021.

E-commerce share of total global retail sales from 2015 to 2021 (graph by statista)

The total number of buyers is growing steadily. Some 1.66 billion people made a purchase via the Internet in 2017; the total number of e-shoppers is expected to reach 2.14 billion in 2021.

Number of digital buyers worldwide from 2014 to 2021 in billions (graph by statista)

The online retail market has already proven to be an attractive sector with a lot of potential — especially when it comes to customer loyalty programs.

At BitRewards, we see great opportunities of tokenization of this field.

Stay tuned to find out more about our model!

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